Dec 01, 2020 – Kuwait City, Kuwait

 

A joint venture between French telecoms group Orange and Kuwaiti logistics group Agility has asked a US court to compel Dechert to produce documents concerning an alleged bribery scheme in Iraq for use in a US$1 billion ICC arbitration over its stake in a Kurdish mobile operator.

In a 24 November filing, joint venture Iraq Telecom asked the US District Court for the Eastern District of Pennsylvania to order Dechert to produce almost 500 documents or allow it to conduct a private inspection of them.

The court last year granted a bid by Iraq Telecom for discovery from Dechert in support of an ICC arbitration that it filed in 2018 against Sirwan Barzani –the founder and owner of Kurdistan-based mobile phone operator Korek –and his company CS Ltd.

That arbitration was seated in the Dubai International Financial Centre (DIFC) and was before a tribunal composed of Belgium’s Bernard Hanotiau, Australia’s Michael Pryles and the US’s Lucy Reed. However, GAR understands that Iraq Telecom discontinued the case earlier this year after the tribunal refused to consolidate another claim led by Iraq Telecom against Korek.

In March, Iraq Telecom launched a new DIFC-seated ICC arbitration against Korek and Barzani, in which it is seeking over US$1 billion in damages. That case is before a tribunal composed of Nicholas Fletcher QC, David Joseph QC and J William Rowley QC.

Iraq Telecom is using Jones Day, Gibson Dunn & Crutcher and White & Case in the arbitration and has turned to Skarzynski Marick & Black and Quinn Emanuel Urquhart & Sullivan for the discovery proceedings. In the arbitration, Korek and Barzani are using Boies Schiller Flexner.

Orange and Agility set up Iraq Telecom in 2011 as a vehicle to acquire a 44%stake in Korek as part of a US$810 million deal. The agreement included a call option that would allow Agility and Orange to take control of Korek in 2014 if exercised.

However, Iraq’s telecoms regulator CMC said in that year that the conditions for its approval of the transaction had not been met and that the joint venture’s shares in Korek should revert to their previous Iraqi owners.

Those actions have also led Orange and Agility to file ICSID claims against Iraq, though these proceedings are not mentioned in the Pennsylvania discovery request.

Alleged bribery scheme focuses on London real estate purchases

In its discovery application, Iraq Telecom alleges that corrupt CMC officials facilitated the stealing of its investment in Korek and the return of the shares to Barzani and the other Iraqi shareholders.
The joint venture alleges that a “key component” of this scheme was the purchase of “two pricey residential properties in London” for CMC officials who issued decisions harmful to Iraq Telecom.
It says the properties were purchased by two “nominee buyers” – Pierre Youssef and Mansour Succar – who were business associates of an alleged “henchman” of Barzani, Raymond Rahmeh.

Iraq Telecom alleges that Rahmeh “orchestrated these crooked London-home purchases” with the assistance of Dechert, although it does not claim that the law 􀀁rm knew it was “facilitating governmental corruption.”

Following the discovery order granted last year, Iraq Telecom says documents were produced that proved “beyond dispute that the transactions at issue were anything but the simple residential real estate purchases they purported to be.”

However, the company says that the nominal purchasers are “conspicuously missing from virtually all Dechert documentation.” It says Youssef and Succar hired separate counsel in the US “at the eleventh hour” to delay document production.

Iraq Telecom says the nominee buyers now seek to withhold hundreds of allegedly privileged documents – which the joint venture calls “an extraordinarily disproportionate number when compared to the 722 documents that were produced”.

The joint venture says that the buyers’ names appear on just three of 467 documents listed on a “privilege log” they prepared and argues that they have failed to establish that the other documents are privileged.

The company also argues Dechert and its clients failed to establish the documents constituted legal advice. It says that they improperly assert privilege over roughly 95 documents on the basis they were forwarded to Dechert, and that a crime-fraud exception to the privilege rule applies.

Iraq Telecom says the two properties in question were bought in cash for almost US$3 million in 2014 and 2016 and that information shows that neither Youssef or Succar ever lived there. They were however occupied by CMC’s former director general Safa Aldin Rabee and present director general Ali Nasser Alwan Al-Khwildi.

Korek has previously denied such allegations as “an offence and an insult to our probity.”
A Dechert spokesperson tells GAR: “This is a dispute between Orange Telecom and Dechert’s former clients about attorney-client privilege, and Dechert is essentially a bystander.”

Other ICC and ICSID claims filed

The dispute over the CMC’s decision to strip Iraq Telecom of its stake in Korek has led to at least two other ICC arbitrations and two ICSID claims.

In April, an ICC tribunal composed of former Mayer Brown disputes head Dominic Spenser-Underhill, Michael Tselentis QC SC of Twenty Essex and Salim Moollan QC of Essex Court Chambers dismissed a US$125 million claim brought by Iraq Telecom against Barzani and CS Ltd.

Last year, another ICC tribunal composed of former English judge Sir Bernard Eder, Ali Malek QC of 3VB and Reed last year granted Iraq Telecom interim injunctive relief.

Gibson Dunn, Jones Day, Quinn Emanuel and Kirkland & Ellis advised Iraq Telecom in the two cases, which were also seated in the DIFC. The DIFC Courts have also heard various petitions relating to the cases.

Meanwhile, Agility and Orange have both launched investment treaty claims against Iraq concerning their investment in Korek.

Last year, an ICSID tribunal composed of Singaporean chair Cavinder Bull, the UK’s John Beechey and US academic Sean Murphy partly upheld jurisdiction over Agility’s US$800 million claim.

In that proceeding, Agility is represented by Gibson Dunn & Crutcher and Kirkland & Ellis, along with Kuwaiti firm Meysan & Partners. Debevoise & Plimpton in New York and Stephenson Harwood in Dubai are acting for the state.

Orange filed its ICSID claim last month concerning its own US$500 million investment and is represented by Jones Day.

Fifty-year-old Korek founder Barzani also serves as a general for the Kurdish Peshmerga and is reportedly nicknamed the “Black Tiger.” In the time that the various disputes over Korek have played out, he led a battalion fighting ISIS in Iraq and previously fought against the country’s former president Saddam Hussein.